Green Co. from the U.S. is evaluating a proposal to build a new plant in the...

 

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Green Co. from the U.S. is evaluating a proposal to build a new plant in the U.K. The expected cash flows in pounds are as follows: Year 0, -70 million GBP (British Pond); Year 1, 40 million GBP; Year 2, 50 million GBP; Year 3, 60 million GBP. The discount rate in BP is 14% and the discount rate in the US$ is 12%. The spot rate is 0.8136 GBP/US$. Calculate the NPV of the project in USD. Green Co. from the U.S. is evaluating a proposal to build a new plant in the U.K. The expected cash flows in pounds are as follows: Year 0, -70 million GBP (British Pond); Year 1, 40 million GBP; Year 2, 50 million GBP; Year 3, 60 million GBP. The discount rate in BP is 14% and the discount rate in the US$ is 12%. The spot rate is 0.8136 GBP/US$. Calculate the NPV of the project in USD.

Answer rating: 100% (QA)

To calculate the Net Present Value NPV of the project in USD we need to convert the cash flows in GB... View the full answer